Nanjing Putian’s asset sale may be an attempt to hold on to its Shenzhen listing, analysts say

China’s resurgent—some say overheating—housing market in major cities is propping up growth in the country’s slowing economy. It’s making current homeowners feel wealthy, at least on paper. And for one company, owning just two apartments seems to offer a lifeline.

Nanjing Putian Telecommunications Co., a state-owned manufacturer of computer wires and videoconferencing equipment, announced in a filing with the Shenzhen Stock Exchange last night that it is selling two apartments it owns in central Beijing. The company gave no reasons for the move, other than describing it as an "asset sale."

To some analysts, however, the sale is likely an attempt by Nanjing Putian to hold on to its listing on the Shenzhen exchange.

Nanjing Putian has been bleeding, suffering two years of consecutive losses. A third year of red ink would be grounds for suspending its listing, under securities regulations. A fourth year would see it delisted.

Nanjing Putian acquired the two second-floor, 141-square-meter flats in 2004 for 2.15 million yuan ($322,634), as a dormitory for some of its marketing and sales staffers working in Beijing. Twelve years on, the apartments are now valued at 22.72 million yuan, according to the company. That amount, the company said, is more than 16 times higher than their current book value of 1.29 million yuan that factors in asset depreciation.

The company’s current estimated market price is larger than the net loss of 21.11 million that the telecom-equipment maker reported for the first half of the year. The company reported net losses of 16.59 million yuan for 2015 and 18.98 million yuan for 2014.

In its half-year earnings report, Nanjing Putian, whose official website celebrates its hardware and technological support for the Group of 20 Nations summit in Hangzhou earlier this month, attributed its worsening fortunes to a weakening Chinese economy and cut-throat competition.

The company may have been a tad modest when valuing the two apartments, according to the state-run Securities Daily, which reported Wednesday that current market prices in the same neighborhood are at least 20% higher.

Citing property experts, Securities Daily said the two apartments would fetch at least 100,000 yuan per square meter, a rate that would push the total gain to 28.29 million yuan.

It’s all about location, location, location.

The very apartment block in question sits in the affluent Xicheng District, the capital city's financial district that hosts some of the nation's leading financial institutions and securities regulator. Three subways stops away from Tiananmen Square, the compound is next to a shopping mall and elegant community park.

More importantly, across a narrow street from the building is Beijing Elementary School, a public boarding school and a prestigious institution established four months before the Communist Party declared the birth of the People's Republic in 1949.

The location makes all apartments at No. 11 Pagoda and Cypress Tree Street so-called "xue qu fang," or school-district apartments, which are hot assets because many Chinese schools accept students only if their families own properties in the same district.

Housing prices, which soared for more than a decade only to a hit a soft patch from overbuilding two years ago, resumed climbing this year, stratospherically so in Beijing and several other big cities. Latest official data showed that average housing prices in China rose at a quicker pace in August than in the month earlier, led by the nation's largest cities such as Beijing, where prices grew 25.8% year-over-year.

While the return of such heat to the real-estate market may be a double-edge sword for the country's economic policymakers, it's unexpected good news for Nanjing Putian.

"Without asset restructuring or sales, it will be difficult for Nanjing Putian to reverse its losses and avoid delisting," Securities Daily wrote. "But if the company succeeds in selling the two apartments, it will offset the first-half loss and greatly increase the chances of protecting its listing status."

Nanjing Putian's official website describes the company's core value as "generating wealth for the society and satisfactory returns for employees and shareholders." Two apartments in Beijing may help.